Chartreusin is a potent antitumor agent with a mixed polyketide-carbohydrate structure produced by Streptomyces chartreusis. Three type II polyketide synthase (PKS) gene clusters were identified from an S. chartreusis HKI-249 genomic cosmid library, one of which encodes chartreusin (cha) biosynthesis, as confirmed by heterologous expression of the entire cha gene cluster in Streptomyces albus. Molecular analysis of the approximately 37 kb locus and structure elucidation of a linear pathway intermediate from an engineered mutant reveal that the unusual bis-lactone aglycone chartarin is derived from an anthracycline-type polyketide. A revised biosynthetic model involving an oxidative rearrangement is presented.